Fact Check: Did Republican Changes Make NC A Better State For Businesses?
In our fact check of North Carolina politics this week, we look at a claim made by Republican state Sen. Paul Newton, whose district comprises Cabarrus County and part of Union County. During a recent news conference, Newton touted changes to the state's tax code Republicans made in 2013.
"Our pro-business policies move North Carolina from among the worst business rankings in the country to the top 10," he said.
Joining WFAE's "Morning Edition" co-host Marshall Terry to assess that claim is WRAL's Paul Specht.
Marshall Terry: Paul, give us a bit of context here. Why was Newton bringing up these tax code changes that Republicans made almost a decade ago?
Paul Specht: Well, they're very proud of them. This is the hallmark of what Republicans have done since coming into power. It was in 2012 that they finally took control of the state House, the state Senate and the governor's mansion.
So in 2013, they changed a bunch of the tax codes, but most notably, they changed the income tax rate for individuals, as well as the tax rate for corporations, lowering it and lowering it. And as a result, they say that that's brought more businesses into North Carolina and thus created more jobs.
Terry: Now, are Republicans looking to make more changes right now? Is that why Newton was bringing up these past changes?
Specht: That's right. This was a press conference to talk about another proposal to slash the personal income tax rate by what they say is 21% for the median North Carolina household. That's why Newton was talking about their previous tax changes. He's looking backward at what Republicans see as a big success and then spinning it forward to say, hey, we have a few more tweaks to make and we believe they'll work.
Terry: Now, was Newton right when he said those Republican policy changes made in 2013 moved North Carolina from among the worst business rankings in the country to the top 10?
Specht: Well, his statement is overly broad. What he did here was he cited one specific ranking that was bad back in 2011 and then made a broad statement based on that. In other words, he cherry-picked.
What we found was the Tax Foundation, which is a very reputable and credible nonprofit group that analyzes tax codes across the country, they did rank North Carolina 46th in 2011. And again, that's important in this context because that's when Democrats still had some control here in the state government. And so that's why Republicans like to point to that year. And now we're ranked 10th by the Tax Foundation.
However, what this ignores is that other reputable groups like Forbes magazine, CNBC and Chief Executive Magazine all ranked North Carolina as very good states for business at the same time. In fact, that same year, in 2011, Forbes, CNBC and Chief Executive Magazine, ranked North Carolina No. 2, No. 2 and No. 3 best state in the country for business, respectively.
Terry: Why the discrepancy between the Tax Foundation's rankings and the rankings made by those three outlets that you mentioned?
Specht: This is very important. The Tax Foundation focuses solely on taxes, specifically individual income, sales tax, corporate income, property taxes and unemployment insurance taxes. And so they focus on those five things. While these other groups, Chief Executive, they actually poll CEOs about their opinion of states around the country. CNBC, they measure 43 different "measures of competitiveness," they call them. Just other metrics, like a state's cost of living, its infrastructure, as well as the state's tax code. And Forbes does the same thing. They look at six categories. They look at the labor supply and the current economic climate and even quality of life is included in Forbes.
So the bottom line is Tax Foundation focuses solely on taxes, taxes that would apply to businesses and even on an individual level. While these other outlets — Chief Executive, CNBC and Forbes — look at an array of things beyond taxes. They're all looking at what would business look like in this state. And the Tax Foundation is looking at taxes. And the rest of these guys are looking at, well, you know, there are other things to consider here that you may or may not like.
Terry: How did you write this claim by State Sen. Paul Newton?
Specht: We rated this claim "half true." And we did that because the Tax Foundation is very reputable and they do look at tax codes in a way that many businesses would. But Newton is only telling half the story here. He's leaving out the part about the other things that North Carolina had to offer even before the tax codes were changed — a labor force, the cost of land, access to big highways that go to other states, all these other things that come into play. And he didn't mention that in this press conference.
I should point out, too, that Newton appears to have strayed from the Republican talking points. In fact, Senate leader Phil Berger's office sent out a press release about these tax code changes that was very specific and mentioned the Tax Foundation specifically. It was not overly broad. It cited the Tax Foundation correctly. And Newton, when he was on the spot in this press conference, his comment was just overly broad. If he had mentioned the Tax Foundation by name, we would be more in the "mostly true," "true" territory. But because he was just too vague with his claim, he gets a "half true."
Terry: All right, Paul, thank you.
Specht: Thank you.